KOTA KINABALU, Dec 7 — Sabah has announced today the setting up of its own oil and gas company to oversee more activities in the industry following a commercial collaboration agreement (CCA) with Petronas.

Chief Minister Datuk Seri Hajiji Noor said that the company called SMJ Petroleum Sdn Bhd will have the opportunity to increase its participation in upstream petroleum arrangements including in partnership with Petronas Carigali Sdn Bhd, as well as in the midstream and downstream oil and gas businesses within the state.

“The CCA is perhaps the most important document after June 16, 1976, when the oil cash payment was agreed upon, signed between Sabah and Petronas. The signing of the CCA today indeed marked a new era in Sabah’s oil and gas industry,” said Hajiji, referring to the oil royalty.

“In line with the terms and conditions of the CCA, the state government aspires to set up its wholly-owned company to be involved actively in the oil and gas industry.

SMJ — the abbreviation for Sabah Maju Jaya — Petroleum Sdn Bhd is expected to spearhead Sabah’s commercial venture in the oil and gas industry as well as coordinate existing state government-linked companies in ensuring all terms and conditions in the CCA are implemented successfully.

“It has been the aspiration of our people that Sabah gets more from its oil and gas industry,” he said.

Hajiji said that the state had been had already taken their own initiative to hold talks with Petronas starting on October 8, 2021, and two months later after numerous meetings, the CCA was finalised.

“This shows that Petronas and the Sabah state government can work together in the development of the oil and gas industry in Sabah.

“The commitment of both Sabah government and Petronas has made it easier for the federal government because it took only one joint committee meeting for both sides to reach a common ground that was stipulated in the CCA,” he said.

The meeting was held on December 1, 2021, during which Putrajaya agreed to endorse and facilitate the enforcement of the CCA.

Hajiji, who is also state finance minister, said that the CCA will allow Sabah to get greater revenue sharing participation and say in oil and gas-related matter through a commercial consultative framework with Petronas while at the same time ensuring Sabah hold on to its legal rights.

Hajiji also announced the setting up of several committees under the collaboration namely Annual Strategic Dialogue (ASD), Joint Coordination Committee (JCC) and sub-committees in the Upstream, Domestic Gas Supply, Equity Investments in LNG & Downstream businesses, Oil and Gas Services & Equipment Industry dan Human Capital Development and Other State matters made up of members from the state government and Petronas.

“As chief minister, I will be jointly-heading the ASD with Petronas chairman, Tan Sri Mohd Bakke Salleh. ASD is the highest discussion platform that will ensure Sabah fully benefit from the CCA in the future,” he said.

Hajiji said Petronas also agreed to hand over rights to access Sabah’s oil and gas data that would better facilitate discussions in the ASD, JCC and technical committees under it.

Besides that, the CCA would allow participation of companies or contractors from Sabah in the Vendor Development Programme and that Petronas would see to it that more contracts be given to Sabahans in the tender process, he said.

A long-standing political issue in Sabah has been its share of the oil royalty taken from the resource-rich state. Political leaders from both divides have been asking for more revenue to be given back from its resources, in particular for the oil royalty, which has been fixed at five per cent since its inception, to be increased to 20 per cent.